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ALLSTATE CORP (ALL) Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered strong profitability: revenues $16.506B (+11.3% YoY), diluted EPS $7.07, adjusted EPS $7.67; Property-Liability recorded combined ratio improved to 86.9% and underlying combined ratio to 83.0% .
  • Auto margins restored (CR 93.5; adjusted CR 95.0 excluding severity benefit) and homeowners remained highly profitable (CR 69.8; underlying CR 59.5) despite higher catastrophe losses; net investment income rose to $833M (+$229M YoY) .
  • Strategic/capital updates: agreement to sell Group Health ($1.25B) with combined Health & Benefits sale proceeds of $3.25B (expected ~$1.0B book gain in 2025); dividend raised to $1.00 and new $1.5B buyback authorization .
  • Near-term caution: Allstate estimates ~$1.08B January 2025 catastrophe losses, largely California wildfires; expects ~$1.1B pre-tax net of reinsurance wildfire losses in Q1 2025, with monthly PIF disclosure initiated .

What Went Well and What Went Wrong

What Went Well

  • Auto profitability: recorded combined ratio improved to 93.5 (−5.4 pts YoY), with favorable underlying loss experience and reserve reestimates; management noted severity moderation created a 1.5-pt benefit (adjusted quarterly CR ~95) .
  • Homeowners strength: underlying combined ratio 59.5 (−1.8 pts YoY) and full-year underwriting income $1.3B despite significant catastrophe activity; CEO highlighted industry-leading homeowners model and reinsurance program .
  • Investments: net investment income $833M (+$229M YoY) led by higher fixed-income yields and performance-based results; CFO emphasized proactive duration/reallocation and public equity increase to $3.3B .

Notable quotes:

  • “Adjusted net income return on equity* was 26.8% for 2024… Allstate remains committed to managing capital and enterprise risk and return to benefit shareholders.” — CFO Jess Merten .
  • “Fourth quarter revenue reached $16.5 billion and net income was $1.9 billion… Operational excellence resulted in solid profitability in auto and homeowners insurance and Protection Services.” — CEO Tom Wilson .

What Went Wrong

  • Catastrophe losses: Q4 homeowners cat losses $315M (+$294M YoY); January 2025 catastrophe losses estimated at $1.08B (after-tax $849M), mostly California wildfires .
  • Auto retention headwinds: auto policies in force declined 1.4% YoY in Q4; management flagged ongoing retention pressure in late-cycle states (NY/NJ) despite improving margins .
  • Health & Benefits margin pressure: adjusted net income fell to $35M (−$25M YoY) due to increased benefit utilization across businesses .

Financial Results

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$14,832 $15,714 $16,627 $16,506
Net Income to Common ($USD Millions)$1,460 $301 $1,161 $1,899
Diluted EPS ($USD)$5.52 $1.13 $4.33 $7.07
Adjusted EPS ($USD)$5.82 $1.61 $3.91 $7.67
P-L Recorded Combined Ratio (%)89.5 101.1 96.4 86.9
P-L Underlying Combined Ratio (%)86.9 85.3 83.2 83.0
Net Investment Income ($USD Millions)$604 $712 $783 $833
Catastrophe Losses ($USD Millions)$68 $2,120 $1,703 $410
Book Value per Common Share ($)$59.39 $62.14 $70.35 $72.35

Segment breakdown (Allstate Protection):

Segment MetricQ3 2024Q4 2024
Auto Premiums Earned ($USD Millions)$9,270 $9,348
Auto Underwriting Income ($USD Millions)$486 $603
Auto Recorded Combined Ratio (%)94.8 93.5
Auto Underlying Combined Ratio (%)92.0 93.0
Auto Policies in Force (000s)24,998 24,936
Homeowners Premiums Earned ($USD Millions)$3,403 $3,548
Homeowners Underwriting Income ($USD Millions)$60 $1,070
Homeowners Recorded Combined Ratio (%)98.2 69.8
Homeowners Underlying Combined Ratio (%)62.1 59.5
Homeowners Catastrophe Losses ($USD Millions)$1,231 $315
Homeowners Policies in Force (000s)7,483 7,511

KPIs and Operating Metrics:

KPIQ2 2024Q3 2024Q4 2024
Total Policies in Force (000s)199,877 205,483 208,345
P-L Premiums Written ($USD Millions)$14,279 $14,707 $13,757
Adjusted ROE (%) (TTM)21.6 26.1 26.8
Market-Based Investment Income ($USD Millions)$667 $708 $727
Performance-Based Investment Income ($USD Millions)$107 $143 $167
Cash Dividends Declared per Common Share ($)$0.92 $0.92 $0.92

Consensus vs actual (S&P Global):

  • Consensus EPS (Q4 2024): Unavailable due to SPGI limit; will update when accessible.
  • Consensus Revenue (Q4 2024): Unavailable due to SPGI limit; will update when accessible.
    Values unavailable from S&P Global at time of writing.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Property-Liability Policies in ForceFY 2025No formal numeric guidance“Expected to grow in 2025 as auto renewal rates improve and new business continues to increase” Raised (qualitative)
Dividend per Common ShareQ1 2025$0.92 per quarter in 2024 $1.00 per quarter effective Apr 1, 2025 Raised
Share Repurchase AuthorizationThrough Sep 30, 2026Not specified in Q4 materialsNew $1.5B authorization Initiated
Health & Benefits Dispositions (EVB + Group Health)2025 ClosingEVB sale announced; Group Health under evaluation Combined proceeds $3.25B; ~ $1.0B book gain expected in 2025; −180 bps impact to adjusted ROE on a trailing basis post close Clarified; strategic reposition
California Wildfires Net Loss EstimateQ1 2025Not applicable~$1.1B pre-tax net of reinsurance; sensitivity ~$10M per $100M gross above estimate New event impact
Individual Health Business2025Under evaluation “Will either be retained or divested” Maintained optionality

Earnings Call Themes & Trends

TopicQ2 2024 (Prior-2)Q3 2024 (Prior-1)Q4 2024 (Current)Trend
Auto margins & severityUnderlying CR 93.5; favorable reserve reestimates; margin restoration underway CR 94.8; severity reduced in Q3; new business +26% QoQ; retention pressured CR 93.5; 1.5-pt severity benefit; adjusted to ~95; growth initiatives across 31 states Improving margins; building growth
Homeowners profitabilityUnderlying CR 63.5; cat losses high but declining YoY Recorded CR 98.2 due to hurricanes; underlying 62.1; profitable quarter Recorded CR 69.8; underlying 59.5; cat losses up vs PY; strong full-year profits Strong, resilient
Advertising & distributionInvestment increased; independent/direct expansion highlighted Advertising ramp supporting new business; National General growth “State-of-the-art analytics”; spend adjusted by market; SAVE program to boost retention; multi-channel push Scaling with precision
Regulatory/geographyRate actions and retention headwinds; late-cycle states flagged Continued rate actions; retention impact CA wildfires estimate; no homeowners growth ambitions in CA; NY/NJ rates continue Managing risk exposure
Investments strategyDuration extension; market-based income up; performance-based volatile Market-based income up; total return 3.7% Fixed-income yield 4.4%; public equity +$2.4B; total return −1.1% in Q4 Optimizing risk/return
Health & BenefitsSolid Q2 results; divestiture plans progress EVB sale finalized; evaluating remaining Group Health sale ($1.25B) announced; combined proceeds $3.25B; ROE impact discussed Execution progressing

Management Commentary

  • CEO Tom Wilson: “Allstate finished 2024 with another excellent quarter both financially and strategically… Adjusted net income* for the full year was $4.9 billion which represents an adjusted net income return on equity* of 26.8%.” .
  • CFO Jess Merten: “Adjusted net income return on equity* was 26.8% for 2024… pay $1.1 billion of dividends and increase total available capital to $21.9 billion… capital can support additional growth.” .
  • Property-Liability President Mario Rizzo: “Auto… recorded combined ratio of 93.5… full-year claim severity estimate went down, benefit worth 1.5 points… adjusted quarterly combined ratio of 95.” .
  • On California wildfires: “Current gross losses are estimated at $2 billion… reinsurance recoveries of $900 million… net loss ~$1.1 billion… reflected in first quarter 2025 earnings.” .

Q&A Highlights

  • Advertising efficiency and spend: management cited advanced analytics, market-by-market testing, and allowable acquisition cost metrics; independent validation of analytics noted .
  • PIF growth outlook: qualitative expectation to grow total Property-Liability PIF in 2025; homeowners growing; auto targeted growth with product rollout and retention initiatives (SAVE) .
  • Pricing competitiveness and agent comp: competitive position varies by state; no planned changes to agent compensation; focus on retention through agents and telematics/coverage optimization .
  • ROE trajectory: prior 14–17% target no longer relevant; emphasis shifts to growth as key driver of shareholder value; capital deployment across organic growth, investments, M&A, and buybacks .
  • California wildfires sensitivity: ~$10M net impact per incremental $100M gross losses above estimate; no homeowners growth aspirations in CA near term .

Estimates Context

  • SPGI consensus (EPS and revenue for Q4 2024) was unavailable at time of writing due to an S&P Global request limit. As a result, we cannot assess beats/misses vs Wall Street consensus in this recap and will update when accessible.

Key Takeaways for Investors

  • Margin restoration appears durable: auto CR in mid-90s and homeowners low-90s target achieved, with underlying ratios suggesting sustained profitability even absent severity benefits .
  • Watch near-term catastrophe overhang: Q1 2025 will absorb ~$1.1B pre-tax net wildfire losses; monitor monthly PIF trends for growth traction amid retention initiatives .
  • Capital-return catalysts: dividend increased to $1.00 and $1.5B buyback authorization support total return; potential additional deployable capital from Health & Benefits sales .
  • Strategic repositioning: divestitures optimize portfolio and free capital, with a modest adjusted ROE impact (−~180 bps) offset by growth investments and underwriting strength .
  • Investment income tailwind: higher fixed-income yields and reallocation underpin rising net investment income, partially offset by equity valuation volatility in Q4 .
  • Trading implications: near-term volatility around wildfire losses; medium-term thesis supported by margin resiliency, policy growth initiatives, and capital deployment discipline .
  • Execution focus: track rollout of Affordable, Simple, Connected products, SAVE retention program, and state-level auto growth progress; monthly PIF disclosure adds transparency .

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